Group saw specimen volume decline 20% and that work has yet to return 15 months later

CEO SUMMARY: A 22-physician pathology group in Tampa has complied with rules for lab test ordering that UnitedHealthcare and BeaconLBS established, yet has experienced a steep decline in the volume of specimens it receives. Physicians told the pathologists that other labs were not using the BeaconLBS system or were not asking their clients to use it. Clients also told the Tampa pathology group that it was the only laboratory asking that their medical group use the decision support system, the lab director said.

IN THE SPRING AND SUMMER OF 2015, Reliance Pathology Partners lost 20% of its business from referring physicians in Florida as the result of a new and onerous laboratory benefit management service that UnitedHealthcare introduced in the Sunshine State.

Since then, the 22 pathologists at Reliance have not seen that volume return, said Joseph Raiano, Director of Operations for the physician-owned, CAP-accredited practice in Tampa and the Interim Lab Director for Ruffolo Hooper & Associates, a pathology group.

UnitedHealthcare partnered with Beacon Laboratory Benefit Solutions, a division of Laboratory Corporation of America, to launch the lab benefit management service. Some physicians say it is onerous and time-consuming, causing many to refuse to use it to obtain pre-authorization or pre-notification when ordering certain medical lab tests. Other physicians have stopped taking UHC patients to avoid having to use the laboratory benefit management system. (See TDRs, July 21, 2014, and Feb. 17, 2015.)

For pathologists and laboratory directors, the design and operation of BeaconLBS raises troubling issues. They ask: How can a lab benefit management service—BeaconLBS—be allowed to steer specimens to clinical labs its parent company (LabCorp) owns?

Questions Left Unanswered

UHC launched the program in October 2014, but did not require physicians to use the system until April 15, 2015. On that date, BeaconLBS started to use the system to adjudicate claims for some 89 clinical laboratory tests and anatomic pathology specimens for UHC’s commercial HMO patients in Florida. For Reliance Pathology Partners, that was the date the pathologists started to lose some of UHC’s referral business, Raiano told THE DARK REPORT.

Founded in 2004, Reliance is an independent lab that contracts with Ruffolo Hooper & Associates to read its cases. A 19-physician pathology and laboratory medicine practice in Tampa, Ruffolo Hooper was founded in 1965.

“We went live when the UHC mandate happened in April 2015 and we went to all of our clients to make sure they were registered to use BeaconLBS,” Raiano explained. “We got a lot of pushback because many of our client physicians weren’t aware of it and some outright refused to use it.

Some Labs Just Say ‘No’

“Other clients were open to it, not because they felt it was relevant to their practice or that it would benefit them in any way,” added Raiano, “but because we had a relationship with them and if they did not use the BeaconLBS system for their UHC patients, we explained that we would not be reimbursed.

“The feedback we got from many client physicians was that other labs either were not using the Beacon system or were not required to use the Beacon system,” he explained. “It seemed like we were the only lab in the market actually trying to use the BeaconLBS system and abide by the rules that UnitedHealthcare established.

“That’s why we lost business. Our clients got tired of having us contact them regarding the BeaconLBS system,” Raiano recounted. “I would say we lost about 20% of our business as a result of the BeaconLBS system. It was a huge number.

“Since then, we’ve been working to get a lot of business back,” he added. “It’s just that Florida is saturated with independent labs. It’s almost like running a pizzeria in New York City: You know there’s always another one down the street.

“Plus, we constantly compete with LabCorp and Quest Diagnostics. They dominate the market because they have most of the insurance contracts,” stated Raiano. “That level of dominance is bad because a lot of providers don’t want to use the big lab companies. They’d rather use small, independent labs where they get better quality and faster service.

“Recently, one group practice I know said that they were no longer accepting patients with UHC health plans.

“But it’s hard to blame the physicians because we were saying they had to use this lab test ordering system while other labs were saying, ‘Don’t bother with BeaconLBS. We’ll handle it for you.’ Why would clinicians use the Beacon system then?” he asked. “These physicians want to make their office staff happy and they don’t get penalized by UHC or BeaconLBS if they don’t use it. So, in reality, they couldn’t care less about using the Beacon system.

“From our perspective, BeaconLBS is kind of a broken system because in their own marketing literature they say biopsies should be taken for certain patients,” noted Raiano. “But if that’s the case, then why is the clinician not penalized if that physician does not use this system that they claim is so terrific?

“If this program is supposed to benefit the patient and help United monitor over-utilization, then the clinician should get penalized and not the laboratory,” he reasoned. “It makes no sense to penalize the laboratory when we have no control over what the physician does when ordering lab tests for UHC patients.

Is This a Conflict of Interest?

“To me, the BeaconLBS system is a compliance issue because an independent laboratory company owns BeaconLBS and the whole point of the software is to dictate when and where a biopsy should be sent once it’s collected,” declared Raiano.

“In addition to the burden that doctors face when using the BeaconLBS lab ordering system, the pathologists in my group have questions about possible legal and ethical aspects of this arrangement,” he continued. “Essentially, LabCorp, the owner of BeaconLBS, benefits when any of its lab businesses receive a biopsy from a referring physician. So how is this national lab company able to create a business that manages the lab test ordering process for a health insurer—in this case, UnitedHealthcare—that includes a system that determines which lab is to get the specimen that the ordering physician wants to be tested? Wouldn’t an arrangement like this border on inducement?

Why Did BeaconLBS Design Its Web Ordering Portal in Ways that Make It Difficult for Physicians to Use?

DEVELOPERS OF ANY SOFTWARE OR WEBSITE always emphasize the need for ease of use. Therefore, when a program or website is difficult to use, it leads to questions about why.

Joseph Raiano, the Director of Operations for Reliance Pathology Partners in Tampa, found the BeaconLBS site particularly difficult to use, especially for any client physician who wanted to order lab tests from Reliance, he said.

“When you look at the software on their web portal, it’s very difficult for clinicians to use,” stated Raiano. “For instance, when entering the BeaconLBS site, there are two areas: one for preferred lab providers and the other for participating lab providers who are not preferred.

“The preferred providers get listed on this nice long list of laboratories, most of which are LabCorp locations,” he noted. “Further, for preferred lab providers, BeaconLBS pays a reimbursement rate that is not the same as the UnitedHealthcare fee schedule,” he said.

Knowing Where to Look

“If you are a participating lab provider—but not a preferred provider [a lab of choice]— you are in some back-end area of the BeaconLBS website that is difficult for the client to find,” continued Raiano, “Actually, the physician must know where to look in order to find this list of labs, then he or she must click through a number of different links to get to the list of participating lab providers, where our lab is listed.

“When we saw that, we went to our clients to explain how to find our lab on the BeaconLBS site,” he added. “We told them we were not on the first page. Otherwise they would never find us on the correct list and wouldn’t know we are a participating provider.

“Plus, we couldn’t send them a link because, for each type of lab test, BeaconLBS shows the physician a different list of labs at the time he/she orders that test,” stated Raiano. “That’s why we went out to our physician clients to show them how it works and how to find our lab on the list.

“Another problem for some of our client physicians was the difficulty in implementing the BeaconLBS system into their workflow,” stated Raiano. “Some practices had to answer only one or two questions to order certain tests. For others it would take many questions and a long time. Each practice had to find its own method of implementing the BeaconLBS ordering processes into their workflow.

“What’s strange is that, if the goal is to reduce costs, this BeaconLBS system is not helping to do that—at least for some physician practices,” Raiano explained. “It actually increases the cost because some practices had to hire additional staff just to use the BeaconLBS system to order lab tests.

“We talked about this issue with representatives from BeaconLBS,” he said. “They told us that physicians are required to justify the need for labs to get paid for each test. But we said that, in pathology the justification for getting paid is based on our report. If our pathologists document everything they do and explain why it was done and include the clinical history of the patient, there should be no ambiguity over why everything was done.

“To me, it seems UHC is trying to save as much as possible because if a client physician doesn’t submit the claim for our test within 10 days, we don’t get paid,” he concluded. “Even if the physician submits that information on day 11, our lab still cannot get paid. Moreover, our lab has no recourse because, if the physician submits it late, it is rejected and we can’t resubmit the claim or appeal.”

FOR RELIANCE PATHOLOGY PARTNERS in Tampa, becoming a preferred laboratory provider [a laboratory of choice] in the UnitedHealthcare laboratory benefit management program was unattractive, in part because of its low payment per specimen, said Joseph Raiano, Reliance’s Director of Operations.

“The terms they offered to become a preferred provider would have forced us to take a huge hit on what our pathology lab would be paid per specimen compared to our normal charges for UnitedHealthcare patients,” explained Raiano.

“If your lab wants to become a preferred provider and get onto the list of what BeaconLBS calls Laboratories of Choice, you must agree to take a lower percentage of what UnitedHealthcare would normally pay,” he continued. “The statement BeaconLBS made to us was that our lab would be paid ‘a little bit less but you would be on the preferred provider list!’ But compared to what our pathology lab is paid under our current UHC contract, the BeaconLBS payment range was substantially lower than what we would normally get under our current UnitedHealthcare contract.

“It’s almost like they’ve put a gun to your head if you want to get your lab onto the laboratory of choice provider list and potentially not lose any business,” Raiano commented.

“To be a preferred lab provider, you’d get the BeaconLBS rate that was a significant reduction off the prevailing UHC rate and your lab wouldn’t send claims to UnitedHealthcare anymore,” he said. “Instead, your lab would send claims to BeaconLBS. Given that disparity in payment rates, it would be easy for a lab to decide it would be better off financially by being out of network rather than being a preferred provider on the BeaconLBS lab panel.

“The only advantage to being a preferred provider is your lab would be listed on that main list on the first ordering page and then you could hope that clinicians don’t pass you by during the ordering process,” added Raiano. “This is why we are simply a participating provider because it was beneficial for us not to take that financial hit in terms of payment. This decision also required us to do a work-around by educating our clients about how to find our lab in their system when they were obtaining pre-notification or pre-authorization for a laboratory test.”

“When it comes to inducements and kickbacks, Florida is a strict state with a lot of laboratory guidelines they use to enforce laws governing kickbacks, inducements, and similar schemes,” noted Raiano. “Well, then, how can this system for determining which lab will get the specimen referral be legal under Florida law when other areas of lab rules are not? I have no idea.

“Isn’t it true that it’s illegal for a pathologist to have a vested interest in a medical practice? So how is it not illegal for a laboratory—via a third-party company it owns—to dictate to a clinician about the specific laboratory where that clinician should send a specimen?” asked Raiano.

In preparing this story, THE DARK REPORT asked UnitedHealthcare for comment on the question of whether it’s legal for a laboratory company to establish a business subsidiary that has a benefit management system that requires clinicians— when ordering lab tests—to send specimens to laboratories that the lab company owns. To date, UnitedHealthcare has not responded.